Are McDonald’s golden arches about to start shining?
Shares of the world’s biggest restaurant chain were slightly down Thursday after the company announced an increase in global sales by 1.2 percent in April, but flat business in the United States.
The Dow component has lagged the broader market over the course of the past 12 months, but it has been picking up the pace in 2014. The stock is up nearly 5 percent while the Dow is negative year-to-date.
So does that mean the worst is behind it? And should take a bite out of Mickey D’s shares?
“I think McDonald’s would be a great place to weather the coming storm in the broader markets,” said Richard Ross of Auerbach Grayson.
Ross sees a move up to $104 per share for the short term in McDonald’s, and stressed that the longer term charts spell huge success for the fast food giant.
“I want to focus on the 150-week moving average,” Ross said. “It’s held for over 11 years. Each time we have tested it, it has proved to be an outstanding buying opportunity.”
Ross noted that McDonald’s tested the key moving average back in February and bounced higher. His bottom line, “you want to be an owner of McDonald’s.”
And according to R.J. Hottovy of Morningstar, the fundamentals are just as bullish.
“I think it’s still going to be a transition year in 2014,” Hottovy said. “This is a fundamental improvement story over the next couple of years.”
Why is that?
“The company is committing to improving its dividend, and increasing the number of share repurchases,” noted Hottovy, who credits this year’s pop to capital allocation. “At this point I think shares are worth $105 per share.”
Check out the full video above from Thursday’s CNBC “Street Signs.”
- Consumer Discretionary